Bank’s Sentance sees some risk of double-dip – Reuters

LONDON (Reuters) – Bank of England policymaker Andrew Sentance said he saw encouraging signs of a pick up in the UK and the world economy, but warned that there was still a risk that a financial shock could derail the recovery.

In an interview with CNBC broadcast on Friday, which largely reiterated a speech he gave on Thursday, Sentance said he expected inflation in Britain to fall back to the central bank’s 2 percent target, or below, helped by muted wage growth.

“I’ve been relatively encouraged by the turnaround we’ve seen in the last year, both in the UK and in the global economy,” Sentance said.

“You have to recognise there is some risk of a double dip, but that’s not the central forecast. You’d have to see some factors bring that about: we’ve seen big shocks in the international economy over the last couple of years, so you couldn’t rule out some new shocks emerging on the financial front which could set back the economy.

“But that’s not my central expectation.”

Britain emerged from recession at the end of 2009, but policymakers have warned that the recovery is fragile and likely to suffer setbacks due to the unusually harsh winter and poor growth in its main trading partners.

The economy expanded by 0.3 percent between October and December last year, but unexpectedly weak retail sales, manufacturing and trade data for January have cast doubt on the prospects for growth in the first quarter of this year.